Getting Loss and Damage right in Warsaw

Blog Post

Getting Loss and Damage right in Warsaw

by Sönke Kreft, November 2013

1. Loss and damage: A new role for the climate regime

Political momentum is gathering for a decision later this week on institutional arrangements at COP 19 in Warsaw. The momentum was spurred last year at COP18 in Doha where Parties achieved a major break through: a decision (3/CP.18) that defined the UNFCCC as the leadership forum to address climatic loss and damage. The Doha Decision defined initial necessary action, and outlines future areas of work. Now Warsaw must deliver on a major discussion on an institutional arrangement for addressing emerging climate problems where adaptation and mitigation have been insufficient.

Loss and damage is determined by the level of preventive action both through reducing greenhouse gas emission and also by ramping up adaptation support and necessary reducing vulnerabilities. Historical greenhouse gas emissions and locked in investments into fossil fuel industries have already committed us to a certain level of climate related loss and damage. Now the level of loss and damage cannot be reduced to zero. Some estimates reported by Working Group 1 of the IPCC illustrate the possibility of a plus 4 – 8 degree world near the end of the 21st century. This is the stark reality that provide the background for the loss and damage discussions

2. Areas to move forward in the coming years “beyond adaptation”

Assuming the leadership role for loss and damage will mean that the UNFCCC regime will play a role in convening policy processes in the nexus of development, disaster risk reduction, humanitarian system and adaptation to climate change. As part of the loss and damage agenda, the following issues (and others that will emerge) need to move forward with a constructive spirit. The starting point is that these debates would fill gaps in the international adaptation architecture. In this sense, it provides concrete ideas to operationalize “beyond adaptation”. It starts from the full implementation of the existing adaptation framework. This includes national structures and processes (NAPs), international leadership on adaptation (Adaptation Committee) and knowledge management (NWP) as well as relevant support (Adaptation Fund, Least Developed Country Fund, Special Climate Change Fund, Green Climate Fund and a streamlining and reporting structure for bilateral assistance). These national and international processes are the base to strengthen loss and damage. For loss and damage agenda to rise to the challenge, we do not need to solve the “beyond adaptation” debate, but it needs discussion on “beyond the existing national adaptation processes”. By this the loss and damage work in addition to the adaptation implementation will provide for a true leap forward for developing countries to tackle climate impacts.

Sharing the risks of climate change: Loss & damage insurance

Insurance has been tabled by some as a mere pay-out mechanism. Such description however is short sighted. Insurance, while it is true that it is directly addressing loss and damage, plays also a resilience building function by buffering shocks for communities and countries.

Countries through the NAPs process can develop and employ climate insurance approaches. However, insurance principles of risk diversification suggest that when individual entities cannot manage climatic risks, then it makes sense to share that risk more widely such as regionally or even globally. This is especially true for sovereign level risks, where the whole country or even multiple countries in a wider region are affected by a climatic risk at the same time. Insurance-related approaches can help communities, countries, and regions manage negative climate impacts that overwhelm local and national capacities.

Such “covariant risk” stretches the current humanitarian relief system and leaves countries under-served and unable to adequately manage climatic risks (such as lower availability of food assistance and higher prices during large droughts). Current ex post and voluntary efforts to manage humanitarian crisis often struggle to meet needs because pledges do not materialize in sufficient time to avoid human suffering.

Wider pooling of risk—such as sovereign risk insurance pools and other ways to share risk regionally — can address this challenge. For example, the Africa Risk Capacity is a pan-African effort of the Africa Union to shore up food security across the continent. ARC has a sovereign risk insurance pool for participating countries, but creation of contingency plans and other risk reduction measures is a prerequisite for full participation. Regional insurance-related approaches can help contribute in an ex ante fashion that resources are available at the right time. Insurance can also provide a way to diminish and share risks of vulnerable countries internationally, and receive co-funding from rich countries to assess the risks and bear the costs associated with climate change damage.

Scoping and definition: Transcending national capacities as a result of loss and damage.

Although asked for by some outside groups and experts, a definition debate is probably not the most fruitful use of limited negotiation time. Definitional discussions – while important in academic contexts for developing fundamental concepts – are distracting in the negotiations context. For example, neither “mitigation” nor “adaptation” were defined through UNFCCC discussions, and “adaptation” has multiple definitions even in the IPCC.

In contrast, there is a pressing need to advance the understanding of what a loss and damage situation actually means for communities, countries, and regions. To make loss and damage operational in the international context, this should focus especially on defining loss and damage situations for countries, where their self-help capacities are overwhelmed. Climate change triggers broader earth system changes, which will fundamentally affect human population at a large and its ability to adjust to these changes. Yet adaptation has largely been dealt with as a local good.

In a next step this description should be matched with concrete ways of support. Therefore, to meaningfully frame a next step in the loss and damage undertaking, a definition and scoping debate to look at transcending national capacities (as a result of climate related impacts) could provide the right starting point into further discussions. While this is easy to capture for rapid onset events, a further sharpening of understanding of the issues for slow onset would also be required to address the concerns of all Parties.

Dialogue to tackle “solidarity fatigue” and overall support for loss and damage

Support to address loss and damage situations is erratic and not systematic. It might respond to media hypes, and political electorates. It is often drawn from other development purposes and comes in the form of credit contingency.

The humanitarian system has made advances in increasing the predictability of support for affected countries, for instance through risk transfer approaches, but also through other automatic central emergency and solidarity, such as African Risk Capacity, or the Central Emergency Response Fund, that was established in 2006. However, there is a gap between identified loss and damage needs on one side, and the available funding. This gap is widening in recent years, at least in absolute terms, and with climate change intensifying weather extreme impacts, this can only be expected to grow.

Therefore, there would be the need to have a constructive debate on enhancing support around loss and damage situations.

International research agenda: System for climate tipping elements, and cascading climate impacts

The UNFCCC should enhance or call for systematic observation through an international research cooperation that details earth system tipping elements, and that develops early warning systems for the identified tipping elements. In addition, the UNFCCC could advance the understanding of cascading climate impacts, inter alia the volatility of international agriculture commodity prices related with climate stressors like heat waves or drought. Such risks are inherently linked internationally and difficult to address through national adaptation planning. Hence, there would be a concrete case for the institutional arrangement on loss and damage.

Large scale consequences for the international system

Current and future loss and damage patterns strike at the central purpose of the international system and of climate policy. The international system is based on the notion of nation states. Negative climate change impacts on society have the potential to impair some of the basic functions of nation states: maintain territorial integrity, conduct economic affairs, have a viable population, and maintain a degree of cultural and identity / social cohesion,

Climate change challenges some or all of these functions, particularly in small and highly vulnerable areas. Further, climate change challenges social objectives—like the ability to achieve food and livelihood security, reduce poverty, pursue human welfare—and may push some societies to limits those societies deem intolerable. These are referred to as “limits of adaptation” in some academic literature.

These elements of loss and damage cannot easily, almost by definition, be addressed by nation states if their capacities are overwhelmed. The international system has a role to play in helping facilitate dialogue about social values, what will happen if some states are impaired in their sovereign tasks in part because of climate change, etc.

An international approach to address loss and damage will be needed to spearhead these discussions and efforts over coming years.

Transboundary human mobility

The issue of human mobility in its many forms—migration voluntary and forced, displacement, and planned relocation—have come up repeatedly in discussion and decision text (Human mobility associated with loss and damage involves concerns about equity; economic and non-economic impacts like erosion of culture, identity and livelihoods; and questions about human welfare now and in the future). The larger questions often circle around whether current population distribution—such as in large coastal megacities, people relying on agricultural livelihoods in rural areas—will shift notably as climate change impacts unfold.

So far there has been resistance on part of both developing and developed countries to seriously discuss human mobility in detail. However, migratory outflow of population is likely to happen as a result of climate change, so it is a relevant topic that needs to advance for the benefit of vulnerable people.

At this stage in Warsaw and beyond, there is a need for enhanced knowledge and understanding including inter alia:

Mapping existing knowledge and initiatives upon which to build dialogue

Economic and non-economic loss and damage related to human mobility including sustainable development and food production of affected populations

Understand what kinds of actions enhance resilience and reduce economic and non-economic loss and damage

Mapping potential implications of human mobility for States and their institutions, as well as existing regional and international institutions and their mandates. Inter alia: more understanding is needed about implications of populations living within and without national borders in relation to climate change impacts; partnerships around risk management and risk reduction for vulnerable communities; frameworks hat would reduce / make more systematic approaches to address loss and damage related to human mobility (in case it happens).

In the future, coordination and efforts to ensure policy coherence will be needed.

3. The compensation debate: Advancing climate justice?

Loss and damage – as an outcome of climate change – highlights the stark injustice dimension of greenhouse gas emissions. Looking at the consequences of climate change, especially in vulnerable countries, will bring to bear that those affected most by climate change in many cases did hardly contribute to the problem. This is certainly true for small islands or least developed countries. Internalisation of external costs for polluters is a prerequisite to consider negative externalities in economic activities, but is still absent internationally and also within most countries.

It can be expected that vulnerable countries will continue to call for compensation of damages as one approach to allow them to recoup the costs of the adverse effects of climate change (along with the call for increased adaptation costs). At the same time, this is unacceptable to many developed countries, which deny attributed liability under international law for the impacts of climate change. The main concern by some groups is that this would open the door to potentially unlimited damage claims. It can be expected that they continue to resist any compensation framing in the cooperation-based UNFCCC regime.

An important difference is also, whether people consider compensation as an approach (e.g. cash payment in the case of a climate consequences to the individual), or a principle.

If it is considered as a principle, it should be moved to the relevant discussions. One issue is that of funding climate change action, where the polluter pays principles in general has been slipped of the table. To solve the climate crisis, the world needs to establish a global carbon price, and install a self-financing system that makes polluters contribute to the costs of the impacts. As a very result of lack of discussions on issues such as assessed contribution, or inclusion of new sources such as aviation and maritime industries, victims of climate change are pushed to take a hard stand on compensation as a way to protect their interest. Therefore, to partially take away pressure on compensation, the discussions for the 2015 agreement are the chance to operationalize the principle of pulluter pays further, put a price on carbon emissions and include more sources (linked to carbon emission, and also to financial capacities).

The compensation debate is largely a result of lack of action (both for mitigation and adaptation), and in absence of a turn-around will only get fiercer. While a strict compensation regime might prove difficult to be resolved in the UNFCCC, in the way forward it is important to identify “valves” to channel the political anger into concrete actions and agendas. Some of the ways forward are identified above.

In the media, loss and damage has been equalled to compensation. I think this is a false understanding. While there are reasons for countries to highlight the issue, the full loss and damage debate is certainly broader. One should not shy away from the challenge, only because it is political.

4. Architecture discussions at COP 19

Most political attention will go towards the debate of what institutional arrangement should be created. The group of developing countries have articulated their joint position to agree on an international mechanism. There are different “mechanism” under the UNFCCC. Most people think of the Clean Development Mechanism under the Kyoto Protocol, but the creation of the Technology Executive Mechanism is maybe a more appropriate example from the recent past. There is also a New Market Mechanism, which is currently explored in a SBStA work programme as well as a GCOS coordination mechanism, which aims to facilitate weather observation projects in developing countries, and which is acknowledged through the UNFCCC process.

Generally a mechanism signals a high degree of institutional ambition. Loss and damage is going to gain in relevance if emissions continue to grow. Loss and Damage is going to be the mirror that shows the inaction of the global community. To move the issue forward, one should install a political landing place for all L&D debates (e.g. a COP agenda item to discuss follow up decisions, as well as a dedicated group of people that works on loss and damage. Given the vision that such group need to convey, it should not be a mere negotiator body, but also entail outside experience. The mechanism could then continue or follow up with activities similar, or in continuation of the work programme of loss and damage, that was launched in Cancun. The mechanism can be further populated in later stages. It might work with, and consists of existing bodies under the convention, also to limit institutional proliferation. However, no body (e.g. the Adaptation Committee) covers the full range of causes for loss and damage, and especially the linkage to mitigation is an important element.

5. Conclusion

This realization has increased awareness of the need to address loss and damage and spurred urgency in climate policy discussions. Vulnerable developing countries would need to have assurance to receive additional help, even if they fully implement their national adaptation plans and planning. This is especially true if the international community jointly fails to avoid dangerous climate change. Bringing the equation of climate change damage full circle means that addressing loss and damage will largely have to be answered as part of the 2015 agreement at COP 21 in Paris.

The question of bringing the world on a pathway of 2° temperature increase will be answered as part of the international agreement, that countries aim to achieve in 2015. The process needs to deliver on ambition both for reducing greenhouse gas emission before 2020 and after.

It is vital that action on loss and damage should not be delayed, this should also frame the perspective for the issue at COP19 in Warsaw. If done strategically, the loss and damage agenda can both improve the international response to mitigate, as well as providing adaptation support and support in loss and damage circumstances.

I thank Koko Warner and Christoph Bals for ideas and discussions contributing to this blog.